U.S. Productivity Slowdown

Paper Summary:

This paper attempts to analyze the specific causes of the productivity slowdown in the U.S. during the 1970s. Three specific causes are identified as prevalent causes for the productivity slowdown: increases in oil prices as a result of the formation of OPEC and the Iranian hostage crisis , the entrance of baby boomers into the workforce which diluted both the experience of the entire workforce in general, and finally, a substantial decrease in technology investments and infrastructural investments on an industry wide level. The paper explores the many different causes and consequences of the productivity slowdown and how this will implicitly affect the industrialized world within the next decade. Two graphs are included with the paper.

From the Paper:

"One of the often cited reasons for the productivity growth slowdown is the impact of high prices for oil. Oil shocks have been a prominent element in economist's views on productivity and overall growth patterns. It is not only attributed as a causal factor for productivity slowdowns, it also is known to cause a phenomenon of "stagflation" where high inflation is accompanied by high unemployment. When during the 1970s and 1980s, overall productivity fail to just .31% it was reflective of a period that experienced severe oil shocks. Oil prices have a distinct impact on productivity because it is used as the vehicle to power every segment of the economy and industry. With the severe oil shocks, costs roses unexpected and so did overall complications in relation with oil shortages. "

Sample of Sources Used:

• Baily, Martin Neil, Robert J. Gordon, and Robert M. Solow, "Produc-tivity and the Services of Capital and Labor," Brookings Papers on Economic Activity, 1981, 1981 (1), 1-65
• Chari, V. V. and Hugo Hoenhayn, "Vintage Human Capital, Growth, and the Diffusion of New Technology," Journal of Political Economy, 1991, 99 (6), 1142-1165.
• Fischer, Stanley, "Symposium on the Slowdown in Productivity Growth," The Journal of Economic Perspectives, 1988, 2 (4), 3-7
• Gordon, Robert J. and Daniel E. Sichel, "[Productivity Growth and the New Economy]. Comments and Discussion," Brookings Papers on Economic Activity, 2002, 2002 (2), 245-265
• Oliner, Stephen D. and Daniel E. Sichel, "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?," The Journal of Economic Perspectives, 2000, 14 (4), 3-22

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